Skip to main content

tv   Worldwide Exchange  CNBC  January 30, 2013 4:00am-6:00am EST

4:00 am
4:01 am
this is today's "worldwide exchange." i'm ross westgate. >> i'm kelly evans. these are your headlines from around the world. >> spain sees a bigger than expected gdp decline in the fourth quarter. one of the most indebted regions asking madrid for more than nine million euros. roche strides lower after posting solid earnings on strong sales of its cancer medicine. analysts warn about the loss of exclusive rights to a key chemotherapy drug. game over for super mario
4:02 am
and friend to turn a profit. nintendo unexpectedly swings to its full-year forecast to a loss showing a poor uptake for its wii u consoles. see you in september. australia's prime minister sets a surprise election date saying it will create certainty for business. okay. welcome to today's program. and you know, we spent all that time waiting for five. today it's about the ten. >> how long did it take you to come up with that? >> about ten seconds ago. >> very good. we're talking about mobile phones. >> yeah. >> do you think people can guess we're talking about the iphone 5. you're waiting for 5. >> you'll about the 10, ladies and gentlemen, blackberry 10. is it the rim lazarus move? >> we saw stocks get whacked
4:03 am
yesterday. in corporate news, a couple of things to keep an eye on in markets. the italian oil contracting giant, one of the biggest by market cap, pointed to shed up to 4 % this morning. this after much more cautious guidance and a big change in price target from barclays which lowered 45%. it's taking down shares of saipem. you see yesterday, closed now, down 3.5%. meanwhile, ne down 3% to 4 after being lowered on the market, italy's other major oil company. and the fiat ceo saying 2012 results in line with expectations. and the group is doing well. he would say that, i suppose. maserati will start the car production -- maserati doing quite well. >> would you like to give that a whirl? >> a little spin. yeah.
4:04 am
they do particularly well. they reinvented the four-dour parts car, then the astin. >> see if it will help shares there. and on the show, we'll head to san francisco ahead of facebook's earnings. we'll speak to the best-selling author on why mark zuckerberg company became successful. we'll fly to chicago where our own phil lebow will join us to preview boeing's earnings after the troubles that company's had with its dreamliners. the latest from down under. australian prime minister surprising people -- you have to wait for a long time. >> it's a long period that they'll have this there. >> the u.k. >> like a u.s. style -- >> in the u.k., you call the election, four weeks later it happens. >> whereas in the u.s. talking about 2016.
4:05 am
>> please. can't stand it. >> it's true. in new york, we'll be waiting for 10, the blackberry 10, folks. >> question is, will it be enough to turn research in motion's shares around? that remains to be seen. first up, spanish economy contracted more than forecast with gdp down 1.8% annually, .7% from the previous quarter. analysts were looking for a smaller 1.7% drop over last year. speaking after the release, the spanish prime minister, mariano rajo, planned to announce new stimulus measures shortly. joining us are sarah perez fruitos, manager at brunswick capital, and sarah foley. add the gdp number to the awful retail sales, forecasts now that spain will still be in contraction in 2014, i don't see how it's at all possible the spanish government is going to
4:06 am
meet -- they'll set out revised budget targets. i don't see how they'll meet any of them. >> really, the t's about the figures that we knew this morning. basically because last quarter we have an increase on the vat taxes and really we pass from the bat from 70% four years ago to 21% now in the last quarter. really as you say, the retail -- the consumer has fallen down dramatic. we need to remember that the public employees has cut their extra payment from the christmas extra payment. and this situation with no more extra for christmas present has fallen down, too, since christmas time. >> citibank says public debt the surge from 88% to 110% of gdp in
4:07 am
two years. surely the spanish government is going to have to go into an ecb program. not so that they can get cheap money. so they can get money flowing. >> yeah. as you say before, the situation is the new ministers that the government call reinforce our economy. really our debt limits is too high in terms of ecb, in terms of europe. okay, we're going to cut in our deficit level, but it's not enough. now the question is, if we need to rein in our growing economy and how to do it if the tax increase is enough for the consumer, it's enough for the companies in our country. really, in fact, the only way that we call -- again to grow in
4:08 am
this next month will be the open of the credit crunch. really we have in this moment. we believe that the banks start again to give money, to give loans to the families and to give loans to companies, to call, again, a stop to working in the growing sense. in the grow impact. >> let's bring you in, as well, jane. the europe doesn't care, up 135, the highest since december, 2011. >> you look at spanish data, perhaps it's not so surprising that we're getting bad spanish data. perhaps it's surprising that we see yields come down. greek yields below 10%. the market is on its risk appetite high. almost the bad news and there is plenty of it has been disregarded in the market's
4:09 am
current move. for instance, the imf forecasts last week. they revised lower for the world. at the end of last year, the ocd -- >> is there a sense that the worse the data gets, the closer spain gets to a bailout so it's going to win/win? >> i don't know. it depends on whether you're asking economists or -- >> i'm asking the currency markets. why they're back to youi in-- they're buying euro. >> the dollar is part of this, and the dollar isn't -- >> not the dollar against the yen. >> the yen is the weakest performing currency now. it was the weakest last year and the second weakest of the u.s. dollar. part of this is because people are buying risk, getting out of low-risk currencies. >> the ecb's -- we're paying it back, they're not cutting rates at the european central bank, because germany's pulling out of a deep contraction in the fourth quarter. this is feeding the short-term lending rates and the dollar and
4:10 am
euro. it's coming at the detriment of peripheral economies. >> economists will say we'd be better off if spain has or does ask ask for the bailout and move on toward expansion. but there's also politics. it would be a big serious blow for the prime minister of spain if he were to ask for a bailout. the opposition would have a field day. in a way he cannot ask for a bailout when yields are this low. perhaps he needs yields to be higher to say he was forced to do it. in this environment it's not going to happen. >> to bring you back, is there any sense at all that the full in borrowing cost for the spanish government is going to feed through into the wider economy? i spoke on friday to the economic affairs minister. he told me this is what's going to happen -- now that borrowing costs are down it will feed through to the real economy. do you think that's going to happen or not? >> i hope yes because really we need some new measures. and we need some help to keep on growing again, as i was saying
4:11 am
before. really, the -- what's going to say prime minister to all the investors. we have problems in the banking system with banking as you tell before. we have problem with the bank, and we need to -- a solution, to solve. with the meeting this morning with the president of the euro group, mr. junker, not tell any news about how will be the new measure. we are waiting and waiting and hoping that the new measures could be really strong, could be really positive. almost -- almost we're wishful that we could see cuts for the entrepreneurs, from the small and medium companies because with this high level of taxes, it's very, very difficult that the conscience and the companies
4:12 am
could increase their result in the next quarter. >> sarah, thanks for joining us. country manager at brunswick capital. jane sticks around for a little bit more. >> that's right. sticking with spain, the two main political parties have agreed on a plane that will allow thousands of small savers to recover money in preferred bank shares that lost money under the recession. if a company loses a case they must pay back the share values plus special. it will be overseen by spain and the regulator. i spoke with the finance minister from davos and asked if there was any truth to report that the government was considering using public money to cover losses incurred by private investors in bank here. this is his response. >> we have a roadmap for bank here that has agreed with the competition in brussels. while we are following the different milestones, we have
4:13 am
injected almost 18 million euros in bank here. we have transferred assets to the bank that was incorporated two months ago. i think this is going to continue, and we are going to carry out a process of reduction of capital and an increase of capital to inject the final amount of money. >> right. what you didn't hear was he said no. he said no, no, no to my question. >> that's all you need to know. >> that's the only thing you need to know. no to that question. >> this is fascinating because the question about how much to protect depositors is extremely relevant to how bad the euro crisis gets. if there's a sense that money isn't safe with bank for any reason, seeing the same thing in cypress, the italian bank, you can't bail everyone out forever. governments can't afford it. >> and the losses -- remember, they were imposed. that's what the use set the
4:14 am
conditions was -- >> exactly. >> you have to have the process. having told all their depositors it's a great deal. >> right. >> anyway. unexpected move, australia's prime minister set the timing for the election. benefits to business are being cited as a key reason. >> reporter: the ahn prime minister has surprised by calling this election so early on. september 14 the date. she says she wants to end political uncertainty. listen in. >> announcing the election date now enables you skpripds business, investors and consumers to plan their year. but the benefit of fixing the date now is not just the end of speculation about election timing. it gives shape and order to the year. and it enable it to be one not
4:15 am
of favevered campaigning. >> interesting timing. gillard is behind now and opposition could easily win. office. -- win office. management of the economy likely to be a key issue. many commentators talking about an end to the mining boom. and the strong australian dollar that the p.m. has tried to distance herself from, saying it's a global issue and beyond government control. putting more pressure on the bank of australia to do more. the central bank board meeting next week. no real reaction to the news on the markets. pew. here we are in the european stock markets. it's 5-5 advances versus declines. show you the dow, not far away
4:16 am
from 14,000. that's going to be the focus of equity players around the globe. we'll put the prices up. put the prices up. thank you very much. ftse up four. the xetera dax down a point, ibex up seven. cac up three points. and we have the auctions later today. support of the btb sale. moving to bond markets. moving on -- we have gremlins. right. the italian yields, 4.18%. ten-year spanish, 10.18%. and the german auction, as well. and ahead of that yield higher at 1.7%. the currency markets have seen action. euro/dollar above 135. the 14-month high for euro/dollar. and dollar/yen 91.17. a two-year high this morning. we heard jillian gillard talk
4:17 am
being the aussie dollar, down at 104.36. hasn't done a lot of on that news. and we have the latest out of singapore. thank you, ross. a positive day for asian borses with the weaker yen pushing the nikkei higher by over 2% to close above the 11,000 level for the first time in nearly three years. yahoo! japan jumped 17% today, too, some four-year high after the share buyback plan and lifted its full-year operating profit in dividend forecasts. in china the shanghai composite extended a three-day winning streak ending higher by 1%. beijing announced new measures to open its stock market to taiwan, boosting sentiment. the property index jumped 2% lifted by talk that beijing is willing to tolerate mild home price increases. hong kong gained % helped by china-related counters in the
4:18 am
gaming sector. lenovo retreated 2.7% ahead of earning. after the bell, the p.c. maker reported another record quarter in both sales and earnings. the bottom line jumped 34% on the year. we'll watch for the reaction tomorrow. remember, the stock had gained 20% year to date. south korea's kospi added .4% helped by samsung electronics. australian shares rose for the 10th straight day. the longest rally since 2003. meanwhile, india's sensex is currently trading marginally in the green. ross, back to you. >> thank you. jane foley is still with us. we want to ask about the australian dollar. this being one of the favorite currencies while china was growing and commodities were strong. what happens now? >> well, the australian dollar has been extremely resilient. this is counter to a lot of forecasts at the end of the year. they were, you know, china's weaker or the australian dollar is overvalued.
4:19 am
australia has got to go down. the australian dollar has to go down. no, i mean, china data over the last month, two months, three months has improved -- doing better. perhaps they will cut rates bo there is a feeling that they still will next week. the resilience of the australian dollar comes back to the yield story. investors still want to buy yields. >> 104.37, down about .3 today. where do you see it midway through the year, 2013? >> i think it will hold between 104, 106 all year. i think it will hold its own. >> okay. jane will stay with us. still to, come nintendo disappoint with a surprise loss. could an open chinese market bump the video game maker to the next level?
4:20 am
4:21 am
4:22 am
plenty of earnings to get through. roche has reported an 11% rise in full-year earnings citing strong sales for its cancer medicines and high productivity. in a first on cnbc interviewer earlier, the ceo said solid growth in emerging markets was helping to outweigh weakness in europe. >> we clearly see different dynamics from a regional
4:23 am
perspective. we enjoy strong double digit grow in markets in latin america and asia. a stable business in the united states. as you point out, price pressure in europe. having said that, actually we are less exposed to price pressure in europe than our competition due to the value and the differentiation of our product portfolio. >> all right. that's the ceo. carolyn's with us from zurich. what do the markets make of what they've heard? >> actually, roche shares are underperforming this morning, ross. they're down by 1.3%. and the fact of the matter is earning were really solid. no major surprises. but the stock has had a really, really good run since the beginning of the year. even since november up by around 20%. profit-taking is really the name of the game this morning, ross. let me just remind you of the key takeaways. roche slightly beating on the top line with full-year sales coming in at 45.5 billion swiss
4:24 am
francs, an increase of 7%. core eps per share were higher by 11%. around 13.62. again, in line with expectations. the company proposed an 8% dividend increase which was more than some people had expected. and it even pointed to further dividend increases in 2013. that's promising. again, in terms of the outlook, not much to complain about because it said that sales growth would be at previous year's levels and profits would grow faster than sales. this is in stark contrast to what we heard from novartis last week which guided for lower profits this year. that's specific to the patent expiring of one of its most important drugs. what we're seeing in roche this morning, to a large extent, is profit-taking. back to you. >> carolyn, just a quick followup question. yesterday we heard from pfizer, eli lilly in the u.s. and generally speaking, a lot of companies are trying to convince the public that there are drugs
4:25 am
in the pipeline, that they're going to be able to come out with the next blockbuster. are investors still buying it? >> i think in the case of roche, they certainly are. roche told us this morning that it's got high hopes for its breast cancer franchise. and the drug pipeline related to that. let me tell you that one of its drugs, progeta, has a 30% market share in the u.s. sales have done very, very well in the last couple of quarters. in fact, it's only been on the market for two quarters. there's another drug called tdm-1. it is expected to be launched over the next couple of quarters. so yes, in terms of roche, the pipeline is still pretty strong. >> interesting. carolyn roth joining us there from zurich. thank you very much. you know, roche shares have done well. they are giving up a little today, down 1.24%. a different story for some of the other companies we're following. h&m reported worse than expected pretax profits for the fourth
4:26 am
quarter as long-term investment in new stores and online shopping weighed on full-year earnings. the swedish fashion chain said it on was track to expand its global footprint this year with 325 new stores. h&m expects january sales to increase 5% from the same month a year earlier. and h & m shares just trying to see if i can find them here, down 2.7%. they are taking a hit on the back of that news this morning. this is what i was referencing. different story for nordic lender swedbank. leading the euro stock 600 after topping forecasts boosted by lower than expected credit impairments. trading higher, up 8.7% just about for swedbank there. meanwhile, staying with the region, naudia posted a better than expected fourth quarter profit boosted by fee and commission income. and amazon's fourth quarter
4:27 am
profits down 45% as high revenues fail to keep up with rising spending on digital content and distribution centers. results missed forecasts. amazon's first quarter outlook is shy of analysts' estimates. but -- but, but, but, gross margins were better than expected at 24%. some see that as a sign that amazon is benefit figure its investment and expansion. jeff bezos is highlighting the strength of the kindle business which has grown 77% last week. the reason i said but they're up 77% and -- they missed sales forecasts, revenue forecasts -- >> does the company ever going to need to make money? >> they like the margins in the kindle. >> look, margins have been the biggest problem. they've had negative margins while they're financing share grab. if they're turning that metric positive, there's good reason for investors to reward it. looks like it's game over for nintendo's profit picture.
4:28 am
japan's top game makers surprised analysts by cutting its earnings after the bell saying it expects an annual loss of $220 million this fiscal year. that's a big turnaround after forecasting the same amount noaa profit. the "super mario" maker blamed sluggish sales of the wii u game consoles for its troubles. for the first nine months, they posted an operating logs of $65 -- loss of $65 month, narrowed from last year. earlier this week the stock was boosted by a report that china may end its more than decade-long ban on selling gaming consoles. for more on this, joining us from beijing is duncan clark, chairman at bda china. thank you very much for your time. >> thank you. >> how much of a game -- i know you can't necessarily talk nintendo's results specifically here, but if china is opening its markets, liberalizing the video game console market here, i guess, how much do companies like nintendo stand to benefit? >> well, you know, potentially
4:29 am
in the long term it's pretty exciting. in the short term, i would temper that by saying that a lot of people actually already have consoles that they bought through gray market channels locally, you know, game consoles that were intended for other parts of the world have penetrated the chinese market. also we have a huge market already for multiplayer online games on pcs and mobile. it's not as though the market is waiting for this to happen. >> this was news to me this week. i didn't realize china was so strict when it came to control of video game consoles. is that changing? does it have anything to do with the new leadership? >> it may be sort of game over. the original mission was to sort of, you know, prevent the corruption of young people in china. i'm afraid other devices have managed to achieve that. you know, there's such a huge gaming industry today, about $10 billion u.s. revenue. pretty much half the global market already. and, you know, the time back
4:30 am
then, there was an attempt to sort of, you know, have kids keep focus on books. that didn't work out too well. >> no. i think when there's a will and a way, easily getting around the controls. interesting that china's maybe finally liberalizing the market when the market's matured, people move on, engage in different types of gaming. if it's not a nintendo is, there anyone who this may be a significant game-changer, so to speak, for? >> i think the key is that the consoles themselves are evolving. used to be an offline experience. now as you've seen with microsoft, already they've matched to launch the connect in china under the guise that it's for educational purposes. at the end of the day, the ban became increasingly ridiculous in the sense that the industry's moved on. people are getting consoles anyway. so i think it's an attempt by the ministries involved. there are probably seven that were involved originally to sort of move on and clear the way. the new government, i don't think that's part of it. it's probably an attempt to clean up something which is
4:31 am
looking increasingly outdated. >> duncan? i wonder whether we'll get any chinese global competitors in this sphere? >> we're beginning to see -- maybe pollution wars or something. i'm coughing as i say it in beijing. simulated blue sky will be something they'll be doing a lot of. we are seeing apps development like ten-cent out of the big gaming player, wii chad, the global messaging like apps business. it's gaining ground internationally. we haven't, you're right, seen breakthrough titles in games. there's so much in western china -- western games have to dumb down. "world of war craft" is not allowed to have skeletons in china for some obscure reason. there's weird involvement at the micromanagement that's going to
4:32 am
prevent local games from doing well locally and going global. we might see games designed for the foreign market which is easier to deal with for developers coming from china. >> a fascinating story. calling it again from beijing. operation blue sky, as he calls that, may be the next frontier in the gaming industry there. duncan, thank you very much. appreciate your time. we've got consumer credit and borrowing/lending figures out of the u.k. better than we expected. net consumer lending up 1.7 billion. it was up .1 billion, about 100 million in november. mortgage approvals, 55,-785. 54,000 in november. that's the highest since january, 2012. stronger than expected, as well. signs, perhaps, that funding for lending has had an impact on margins. we mentioned mortgage approvals, it's better than expected. 55,000 still on a circle basis is a weak number. >> right. >> but maybe signs for lending is starting to -- >> this fits in with the
4:33 am
stronger employment figures, you know, that the whole debate -- let's ask jane sort of where the market is coming down today. >> saying seven, spiking off on the session lows. >> exactly. the dichotomy between weak output, stronger figures at least in terms of employment and these data continue. >> yeah. we've got to put the figures into perspective as ross said. these are better data, and the lending is working but it's from a low base, money supply weak from a historical basis. i've been reading the consumer pages of some of the newspapers. mortgage rates have been coming down. what's interesting is for first-time buyers they can have smaller deposits, lower interest rates. that suggests that perhaps finally there will be stability. >> twoir fixes, five-year fixes, the cheapest they've ever, ever been. if you have the deposit and can find someone who wants to sell a house, you have a choice. >> yeah. again, it is good news.
4:34 am
of course, as you point out, the u.k.'s far from being out of the woods. there is a risk that we could fall back into triple-digit recession. the bank of england have to do that, too. >> we're seeing it at almost 12-month lows against the euro, weakened against the dollar. where is it heading? >> sterling is going to be weak. the maybe reason in my view is that the euro is better. the prospects of the emu remaining coherent have spent -- if you like, that is open to the sterling to the brunt of its fundamentals. >> 150? >> possibly. >> interesting. jane, we'll follow up with you. thank you very much for coming in. jane foley, senior currency strategist. not out of the question, 150. >> no. that was the hsbc call, as well. >> fascinating. >> you feel worry good the consensual nature of the call now. two people. a big day for research in motion. the company kicking off a long awaited and overdue makeover for
4:35 am
the blackberry. >> the ceo will show off the first phone with the blackberry 10 operating software at an event in new york at 10:00 a.m. eastern. r.i.m. has redesigned the system, embracing apps and multimedia experience that's prevalent on rival devices. analysts say there may be room for rim to see make a comeback. >> r.i.m. stock hitting a nine-year low in september. it was off 3.2%, as you see, yesterday. worth pointing out, i did get a personal look at it. >> what did you think? this was in davos? >> in davos on friday. and like steve -- stevel ly ees who had play on thursday night, i'm a tech phobe. user experience is all i care about. the blackberries i had liked because of the keypad. i thought it was a good e-mail machine. everything else i don't particularly like. and it is a very cool operating system. and --
4:36 am
>> doesn't have a keyboard, right? >> they are going to do two. one with a keyboard, one without. the one with the keyboard is coming out a month later. >> that's the one -- >> actually, the thing about it is, you can do it on one hand. it learns the prescriptive -- what do you call that when -- you type something in and predict it -- >> predictive. >> the predictive script or texting. i don't know what i'm talking about. the predictive scripting, it learns your -- >> i think that's freaky. i'm sorry. >> after a month it gets -- >> it is clever/scary. will you buy the blackberry 10? more later. we want to know in the meantime if you're planning to buy one of the new devices, e-mail us here or tweet us from your blackberry, iphone, at cnbcwex or kellyevans. in new york the launch of the 10. yes, will it be enough to turn around r.i.m.'s fortunes, or
4:37 am
will the 5 keep taking share?
4:38 am
4:39 am
let's remind you of the headlines. spain sees a bigger than
4:40 am
expected decline in gdp in the fourth quarter. asked madrid for more than nine beingur euros. roche trades down after strong sales of its cancer medicines. sales and analysts warn about the loss of exclusive rights to a chemotherapy drug. and nintendo unexpectedly revises its full-year product, citing poor uptake for its wii u consoles. and boeing asked for records on batteries used on dreamliner jets after al nippon airways reported it had to replace faulty devices on jets several times. an hour and 40 minutes into trade for european equities. we're holding the line basically. the ftse 100 up at the day high. only up .2%. the rest of the markets, germany, france, spain are fairly flat. they'll be driven by what happens with the u.s. markets. the dow just shy of 14,000. >> true. extraordinary levels there.
4:41 am
more in a bit. first, look at the bond space. sovereign bond space. spain's ten-year continues to inch higher, 5.17%. italy moving up 2.24%. and sell-off handing in bonds and yields. 1.71%. extraordinary. >> a technical lev. 1.71%. we have a 30-year from germany, pretty small. a five and ten-year out of italy. they're optioning up 6.5 billion. we expect that to go well. >> they've all gone reasonably well this year. not necessarily helping internal financing costs which we'll get into it when it comes to the auto market in particular. interesting to watch gilds moving higher after the somewhat stronger than expected mortgage lending data. turning to south korea, earnings season in full swing. lg electronic profits have taken a tumble. there's good news for the world's second-biggest chipmaker. we have the latest from seoul. hi, sherry.
4:42 am
hi, ross. sk heinex and lg reported four quarter profits today. one interesting thing was that shares rose in reaction to earnings even though they both missed market expectations. and then traders lost confidence as they dug deeper and got specific breakdowns of the numbers or 2013 outlook. s.k. hnnix swung back, good news. but the chipmaker said its 2013 investment amount is likely to become smaller, disappointing investors. mobile chips was the main driver of its profit this past year as hynix says and they will continue to be this year, as well. with the smartphone and tablet p.c. markets likely it continue to grow this year, as well. and that growth can definitely bode well for lg electronics. it's been struggling to catch up
4:43 am
in the high-end smartphone market. it looks like its smartphone optimist, and g.e. is helping out here. the phone business did swing back to a $55, one of profit. profit for the first time in three years. that is the big news for l.g. electronics. but its television division disappointed due to high year end holiday promotion. ross, back to you. >> all right. thanks for that. have a good evening there in seoul. as the yen continues to weaken, japan's exporters are seeing slips in profits. cannon featuring a perfe picture-perfect 2013. we have the latest live from tokyo. a picture-perfect 2013, huh? >> hmm, yeah. stocks did really well today. the nikkei index gained more than 2% closing at its highest level since april, 2010. investors are buying up blue chips where earning are boosted by the weaker yen. one of those stocks was cannon.
4:44 am
the cater for japan's exporters. canon projects a net profit growth for 2013. overseas sales are getting a past from the falling yen. the japanese camera and chip maker expects a pickup in profit and 9.5% rise in revenue for the next fiscal year. net profit for the fourth quarter fell fractionally by 0.4% from a year earlier. the firm sees its profitability improving dramatically based on the favorable foreign exchange environment. canon said each one yen change in the dollar rate against the yen would affect its operating profit for 2013 by about $85 million. when japanese companies do well, japanese banks also benefit. the financial group said its net profit gained 34% for the nine months ending in december. earning of japan's third largest lender by assets were helped by a year-end rally japanese stocks that gave its equity portfolio a
4:45 am
big boost. back to you. >> okay. thank you very much. the national transportation safety board is asking boeing for a full history of the lithium ion batteries used on its 787 dreamliner jets. the ntsb made the request after recently learning of incidents that occurred before the battery fire on an al nippon airways jet at boston's logan airport on january 7. and it replaced batteries on 787 jets ten times after they felt it charged improperly or showed other problems and told boeing about the swaps. the airline has replaced batteries on its dreamliners. boeing reports four-kwourth earnings at 7:30 eastern to see. we'll be talking about this. mr. lebow will have the inside track. >> yes, excited for that. a mixed victory for samsung electronics. this after a u.s. federal court rejected apple's bid to raise $1 billion damages paid by samsung in a patent infringement case. u.s. district court judge lucy
4:46 am
coe said samsung did violate several of apple's patents in smartphone and tablet products but said it wasn't willful and threw out the request to hike damages on samsung. she also denied samsung's request for a new trial. this just continues to go back and forth between the companies. >> yeah. that's going to run, isn't it? here's a look at the agenda in asia tomorrow. expecting a raft of earning from japan. the financial soft bank, toshiba as well as a&a. and malaysia and new zealand central banks are due to release policy decisions. in the past hour, fiat ceo has warned that the european car market is in free fall and has not hit bottom. he says the full-year results due today will be in line with market expectations. analysts had feared the number would be worst than forecast a day after u.s. automaker ford reported solid profits but a wider operating loss in europe this year. for more, joining us is co-head
4:47 am
of research at bank house metsler. thank you very much for your time. some interesting thing happening here across the auto space in europe. the bottom line seems to be one of weak not. how bad is it going to get? >> yes, i think it's at the pessimistic end of the forecast for the market. i heard yesterday that the ceo said the market is going to fall 3%. this sounds optimistic. i think the truth is probably in between. i expect the market to be down by 5% in the first quarter, to be down between 10% and 15%, so the first quarter will definitely look weak, especially as general at the could be weak. i think it's because of the year, the transfer surprise is more on the upside than on the downside. >> we should be clear that there is differentiation across europe where the german brands, volkswagen, doing quite well. that seems to come down to some extent to financing costs. can you explain? >> yeah.
4:48 am
volkswagen has a big advantage to be very strong in emerging markets, to be also on the upswing in north america. and to have very good product portfolio. they outperformed the european market last year by almost 10% points. i think this will probably continue for the next few months. they have many advantages on their side. and i think this is not going to change quickly. so volkswagen is to me the winner again in 2013 like it was in 2012. >> meanwhile, what does maccioni doing with chrysler? is he going to try to buy all of it and then float it again? >> could well be. he's an extremely good financial manager. he tries to optimize the vaulg of the company. and -- the value of the company. and i think at the moment it looks like full control over chrysler is good for fiat. almost 100% of the earnings will come from chryslerment and probably more than 100% in 2013 as fiat itself could make losses
4:49 am
this year. i think it's good for fiat's value probably to be even more involved in chrysler at a later stage when the european market could stabilize. i think the opposite could then happen, as you say. >> so look, when you talked about the market in -- he talked about the market in free fall in europe, there's a reason for it. fiat seeing losses, the profits down 17% last year. then you look at where we are with the french manufacturers. the overcapacity they have. how different are the three -- there's enormous difference between the countries and what's going on in germany. >> absolutely. even the german market is looking relatively week. at the end of 2012 the market fell almost 10% in the last two months. and so even germany is now in a not-so-good shape. okay, the german producers look better simply because export
4:50 am
business of premium cars is doing well, too, outside of europe. this is the key to the success in 2013 as it was in 2012. at some point, there is simply a bottom where replacement demand or purely placement demand is stabilizing the market. at some point the economies might start to improve a little. maybe it's 2014, but maybe it's already the final months of 2013. i'm not extremely pessimistic at least for the longer term beyond say mid 2013. >> thanks. co-head of research at bank house metzler. in the corporate space, saipem shares down. 38%. this one of europe's biggest oil services companies. italian based and taken down. in -- n.e. this morning. n.e. traded sooner, the latest
4:51 am
down 3% to 4%. barclays in a note cutting its price target on the company by 35%. sorry, by 45% to 40 euros a share. as you see, it's well below that today, calling its report the fall of the king. and in fact you see it's been quite a fall this morning. down 38%. we'll keep an eye on the impact on the sector and market. >> reminds me that saipem was saying the operating profit 6% lower. for 2013, they're predicting a fall of 80% in ebit for onshore business and a 70% fall in onshore/offshore activity. and those are the numbers that are enormous. >> exactly. the magnitude of that and the fact that the backlog won over recent years has been in barclay's words suboptimal. the delay of mega projects they were supposed to win. several issues coming together for the company. unfavorably so. >> all the service companies are taking a bit of a downward move on the back of that, as well. still to come, we'll be to new york to preview the launch
4:52 am
of the 10. >> will it be enough to turn r.i.m.'s fortunes around? investors yesterday expressed some caution. [singing] hoveround takes me where i wanna go... where will it send me... one call to hoveround and you'll be singing too! pick up the phone and call hoveround, the premier power chair. hoveround makes it easier than any other power chair. hoveround is more maneuverable to get you
4:53 am
through the tightest doors and hallways. more reliable. hoveround employees build your chair, deliver your chair, and will service your chair for as long as you own your chair. most importantly, 9 out of 10 people got their hoveround for little or no cost. call now for your free dvd and information kit. you don't really have to give up living, because you don't have your legs. hoveround replaced the legs. and now every hoveround comes with this handy tote bag and cup holder for access to your favorite items. and right now, get this limited edition hoveround america travel mug free with your hoveround delivery. [singing] hoveround takes me where i wanna go. call or log on to to find out where a hoveround can take you!
4:54 am
welcome back.
4:55 am
we're expecting the launch of the blackberry 10. we want to give context around the launch. look at what some of blackberry's competitors have seen in the launch of their most recent models. it's going to be a tough task to be beat these tasks. apple selling 35 million units. samsung's galaxy s3 selling 40 million unit. when it comes to the blackberry 10, analysts have expectations in the range of just half a million in the quarter through february for the sales of the device, the range of 13 million for the year. shares yesterday down 3%. even though as you have seen, people are excited about the product, can it actually sell enough devices to change the fundamental investing story for r.i.m., especially given the numbers that these competitors are turning out? >> all right. that's what we're looking at. joining us is will connors, reporter at the "wall street journal." will, good to see you. thanks for joining us. i did get a little look at this with the ceo in davos on friday.
4:56 am
i don't know much. it looked pretty cool to me. so look -- i guess the thing is, are consumers, customers going to want to buy it, and what does it do for the company? >> the thing is, is r.i.m. going to have enough marketing power with the carriers, its own cash, to get it in enough hands of consumers so they can test it out and see it? they have to train carrier staff to go through this phone, it's a new operating system. average consumer is not going to necessarily walk in off the street and immediately pick one up without support prosecute third-party marketers. r.i.m. has a tough challenge to get these in the hands of average joe consumers. >> it is a new operating system. it's a -- there's a whole new way of using the phone here that i haven't seen in any other. getting -- it may be difficult to buy one and figure out what you got to do.
4:57 am
>> exactly. the key to the company, these things. they say they'll market in the hundreds of millions of dollars around these phones, but whether or not that translates into success early on especially remain to be seen. unfortunately for the company they don't have a lot of time. they don't have the luxury of a year to try to make sales. they really have to prove its worth in the first few months. >> the -- you mentioned the operating system. here's the thing. at the end of the day, can r.i.m. do an apple? how much is riding on this phone to do that? >> well, i mean, i think that's probably pushing it. and, you know, i think r.i.m. would say they're not trying to, they're just trying to become a viable third player in the smartphone market. but if they don't, everything is riding on it. the future of the company as we know it is writing on it. >> that's what i mean by apple, i.e., i don't mean become as big as apple.
4:58 am
i mean turn around their fortunes in a substantial way. >> i mean, they think so. they seem to be hedging their bets and saying it's not just about one smartphone, it's about a mobile computing system. take that for what it's worth. but, you know, they think that they have something viable and powerful. they're confident. everything they've said over the last few months and employees that i've talked to are confident that this is something new and that the market will respond. >> will, good to see you. thanks for joining us. all will be revealed later. will connors, reporter at the "wall street journal." i'm talking about in terms of the phone. >> 10:00 a.m. eastern, correct? five hours to go. countdown. boeing's ongoing dreamliner woes threaten to overshadow its report later today for fourth quarter earnings. can it keep flying high?
4:59 am
5:00 am
5:01 am
welcome to "worldwide exchange." if you're just tuning in, i'm kelly evans. >> i'm ross westgate. here are your headlines. >> spain sees a bigger than expected drop in fourth quarter gdp as one of its most indebted regions asked for nine billion euros. trades low after posting full-year earnings thanks to sales of cancer medicines. some warn about the loss of exclusive rights to a key chemotherapy drug. more woes for boeing. regulators ask the company for
5:02 am
records on batteries used on its dreamliner jets after al nippon airways reveals it had to replace faulty devices on its jets several times. and betting on black. research in motion take the wraps off the long delay in software which they say is crucial to the company's survive. yes, folks, today it's time for the 10. a couple of key levels in u.s. markets that we're watching so closely. 1, 3.909 -- 13,909, the dow. the question is whether it will punch through the 14,000 level, whether it can retest nominal highs. 14,107 i believe the all-time high. the nasdaq for its part well off, by the way, its boom-era highs by 40%. shows you the extraordinary nature of the tech bubble. nevertheless, it's been one of
5:03 am
the strongest performers since the market bottom in march, 2009. the s&p 500, 1,505. trying to add more points. after having tested the 1,500 level, trying to hold. the ftse 300 gives a sense of what's been happening overnight in trade. boosted by japan, up something like 2%, 2.3%. this index up 0.15%. the european markets are less exciting, up about .2% for the ftse. barely lower for the xetera dax. the cac higher by a touch. ibex same story. the mib, italy's index, saipem which we'll get into, has been down by 40%. >> and a warning from saipem. we'll look at that. and italy also in focus today as far as the bond markets are concerned. they'll auction 6.5 billion split between five and ten years. $2 billion to $3 billion of the five year. yields up -- yields across the
5:04 am
board higher today. gilds up. and the 30-year bond auction. we've been nudging over 9.71%. key technical levels i am informed for the ten-year cash yield. currency markets, euro/dollar to the highest since we've seen since december, 2011, above 1.35. we're consolidating the break, 1.34. dollar/yen, 91.29. we're on the mark at the moment. we'll get an election in australia in september. the prime minister, gillard, mentioned that. hasn't done much for the aussie/dollar, 10 .04.-- 1 . 0. and mortgage approvals better than we might have thought. signs potentially that funding for lending scheme can starting to feed through. it's off a low base. that's where we are in europe, ahead of the u.s. open, let's recap the day. we have more from singapore.
5:05 am
thank you. it's a good day for sabre an markets, especially the japanese stocks. the nikkei 225 finished above 11,000 level for the first time in nearly three years tanks to a weak yen. yahoo! japan jumped 17% today to a four-year high on its share buyback plan and earnings optimi optimism. the shanghai composite extended a three-day winning streak ending higher by 1%. beijing announced measures to open a stock market to taiwan, and that helped boost sentiment. the property index jumped 2%, lifted by talks that beijing is willing to tolerate mild home price increases this year. meanwhile, clsa expects china's new home sales would rise 15% in 2013. shares in hong kong gained .7% today, helped by china plays and the gaming sector. lenovo shared pulled back 2.7% ahead of earnings. after the bell the pc maker reported another record quarter
5:06 am
while earnings jumped 37% on the year. we'll watch the reaction yesterday. elsewhere, south korea's kospi added .4% helped by strong gains by index giant samsung electronics. australian shares rose for the 10th straight session. its longest rally in about ten years. minus gains on high praises. insurers rebounded from recent losses due to fire and blood. india's sensex finished a touch above the line. back to you. >> all right. thanks for that. you can relax. >> we want to bring you the latest on saipem. we showed earlier what was happening with the stock. it had taken a while, ross, just to even open this morning. this after it warned -- lowered its guidance for 2012, 2013. barclays, a slew of companies slashing price targets, slashing their view on the company. shares finally opened a couple of hours after they were supposed to. they were down 36%. then they were suspended. now they're trading down. a huge hit to the major italian
5:07 am
company. >> and the profit warning came after the market closed yesterday. so it's taken a while for them to get reaction today. 80% in oil profits for 2013. >> and the sector oil and gas down 1.3%. it is the weakest performer in the euro stock 600 this morning. spain's economy meanwhile contracted more than forecast in the fourth quarter. gdp down 1.8% annually. north .7% from the previous quarter. analysts were looking for a smaller 1.7% drop over last year. speaking of parliament, the spanish prime minister mariano rajo planned to announce me to stimulus measures. if i can say it, stimulus measures. stefan is in madrid. not the best number. i mean -- >> market reaction. >> yeah. >> well, it's almost flat which seems to be quite a good indicator the market is not really worry good this number even if the contraction of the
5:08 am
gdp in the fourth quarter was a bit stronger than expected. down 0.7%. about twice the pace of contraction that we've seen in recent quarters. and in the full year, the spanish economy shrunk by 1.4% which is a bit less than what the government was expecting. the domestic demand is under pressure in spain because of austerity measures including the increasing v.a.t. rates. the retail sales down nearly 11% in december. and they've been down for 30 months, 30 consecutive months. the spanish government remains confident that the situation is going to improve and that economy would reach down to growth by the beginning of the year. that's an optimistic scenario. private companies believe it won't be possible this year. the imf, for instance, believes the spanish economy will shrink by 1.5% in 2013. the government is about to announce some stimulus measures to boost the economy. they will be discussed at the
5:09 am
weekly cabinet meeting on friday. if there is an agreement, the announcement of the spanish stimulus package could come as early as friday afternoon. over to you. >> thank you very much for that. spain's two main political parties have agreed on a plan that will allow small savers to recover money they invested in preferred bank shares. those have lost value since the country entered recession. under terms, if the bank loses a case, it must pay back the chur the share value -- the customer the share value plus interest. it will be overseen by the bank of spain and stock market regulator. friday i spoke with the finance minister from davos. and i asked him whether there was any truth to report that the government was considering using public money to cover losses, some of the losses incurred by private investors in bank here. this is what he had to say. >> we have a roadmap that has been agreed with the competition in brussels. and while we are following the
5:10 am
different milestones, we have injected almost 18 million euros. we have transferred a lot of toxic assets to the bank and that was incorporated two months ago. i think that this is going to continue. we are going to carry out a process of reduction of capital. to see inject the final amount of money. >> founding partner at macro strategy partners, james, good to see you. they will delay plans. when the spanish economy is declining and citi forecasts seeing total debt-to-gdp will go to 120% debt-to-gdp by 2014. still in contraction. if that happens, how much more money do they have to put into the banks? how much more of a fall will we have in real estate prices? >> this is the problem. once you get into a systemic crisis and real estate prices fall, what you need to create a
5:11 am
flaw, a clearing price, you need someone to be lending to the buyers at the foreclosure auctions. this is a real issue in a systemic crisis because all the banks are trying to shrink their numbers and no one wants to lend to the guy in the auction room saying, hey, down 50%, i wouldn't mind buying this. look at where all of the banks had funding gaps, they still doing thisment trophy assets put on the market down 90% and still no buyers. this is a real issue. >> does it just not mean that the spanish government is going to have to go? it's very well having cheaper funding, but if there's still no availability of that feeding through to the economy, they have to get the omt. >> the important thing is to understand it doesn't matter how cheap, the authorities make funding in a banking environment. if the bank who are in charge of passing that funding and that credit on to the rest of the economy are still repairing their balance sheets, what that means for a bank is i have too
5:12 am
little capital and too many risk assets. >> the omt, if they launched it, would that solve it? >> no, the mmt and ltro before it are doing, all that is doing is creating liquidity. basically it's making sure if -- if i'm a bank and technically insolvent, people might -- >> but the ecb would be buying assets, though, right? >> yes, what matters is not how many assets you buy, therefore how big a central bank balance sheet gets but who you buy the assets off. >> if i buy them off the spanish banks? >> if you buy off the banks, tussle stays locked in the banking -- unfortunately it stays locked in the banking systems. q.e. specifically circumvents the banks altogether. the counterparty is a nonbank. money goes straight to the real economy. because you miss out on the money multiplier, you have to do so much of it. that's why the central bank balance sheets have ballooned. >> the fed will wrap up its two-day policy meeting with a decision due at 2:15 eastern. the fomc will stay the course,
5:13 am
renewing its pledge to keep rates at historic lows until unemployment drops and maintaining its bond buying at $85 billion a month. there are new voters on the panel at this meeting. kansas city fed president esser george is viewed as a hawk. and boston will lead in thresholds, seeing the fed go even further. the u.s. economy likely grew at the lowest pace in nearly two years during the fourth quarter. that's according to estimates for the advanced gdp report. that's also due today around 8:30 a.m. eastern. reuters' analysts expect gdp to grow 1.1% annually. that can't be right. down sharply from 3.1% growth in the third quarter. the reason i wonder if the estimates are the latest is that after the stretch of data from the past week, some like jpmorgan expect the annualized figure to be 0.4%. it could be well below 1% for the figure. >> and the auction from italy, as well. they're looking to raise 3
5:14 am
billion of the 5 year. they have done that. the gross yield, 2.94%. looking to raise 3.3 billion from the ten year. they've done. that the gross yield on that, 4.17%. i think that is the lowest yield since october, 2010. they sold the $6. billion maximum they were looking for. and yields on the ten year, the lowest since october, 2010. james -- crisis, what crisis? >> absolutely. we've got nothing to worry about, have we? one of the things which i think is really interesting is what kelly -- the bit that kelly was talking about, about the u.s. -- >> she's always much more interesting than anything i say. >> sorry, ross. that's a given. the thing is that, you know, really what you do q.e. for is to replace the money that's being destroyed when the banks are shedding loans. u.s. banks haven't been shedding loans for the last 18 months. they've increased lending. therefore we should never have had q.e. 3. as long as inflation is under
5:15 am
control, it has a secondary mandate to look out for unemployment. therefore, the fed is doing extra stimulus when it shouldn't. >> you suggesting the economy is stronger without the latest program? i would argue it's only lately and with the program in place that we've started to see conditions suggest a stand-alone, cyclical, stoebl growth period. >> yeah, the economy -- because we've got temporary tax measures and everything in place, the economy underlying is obviously running at a lower level of activity than we're sort of seeing on the headlines. if we take the economy off live support, we strip away some tracks and stuff that hang over from the bush era, we would get a one-off drop. the underlying level in the economy is okay. therefore, if you too q.e., you're overcook -- if you do q.e., you're overcooking it. >> that's an open question. toward the end of the expiration of the programs, a second round of quantitative easing, we saw markets selling off, renewed concern, the flight to safety bid around the world. and that it takes these programs
5:16 am
in place in order to keep sort of the patient alive. >> it does require these programs to be in place during the periods where the banks are contracting their loan books. now we're in a different period in america. the banks have completed that process. they are essentially fixed. there's still losses to come, but no longer potentially fatal. what this means is that if you deploy an inflationary policy on a non-deflationary bank drop, you'll get inflation. look at treasury yields. treasury yields in december were 1.55. they've risen by .3 by december. scary. >> we have seen moves like this before. if you think back to yields being above 4% in early 2010, we've gradually taken the expectations down so far that each time people have expected there to be some massive rerating, that we're out of the thick of it, it comes home to roost. is the japanese experience not telling us that it's pert to err on the side of doing too much rather than too little? >> unfortunately that's the lesson people will take. the lesson you should take is that japan never did q.e. not
5:17 am
like we're doing q.e. they did it in the sense that they stimulated bank reserves. they never pumped up -- japan has never grown much more than 2.25%. the whole of the last 20-year period. in america now, they don't even publish broad supply. based on my proxy, the best i can get, running at 7% and rising fast. this is way stronger than anything japan's seen for 20 years. >> people may be moving into cash as a safe haven move that are boosting that. we could have the debate, i think, for quite some time. it's a fascinating point, though. how similar is the u.s. to japan is going to be one of the critical questions for the next couple of years. you expect no move from the fed? >> i expect before the end of the year the fed will be forced to publicly cancel q.e. otherwise the treasury market will fall through the floor and have a real problem with inflation expectations. they're already almost at five-year-high levels. >> we'll leave it there. james ferguson, founding partner of macro strategy partners. >> who pointed tout's far more something what kelly says than
5:18 am
me. >> that's only because i bribed him before he came on with a blackberry 10. >> it's a truism. a -- one of those things that just is. still to come, even though i'm saying it, i hope you stay with me. roche earnings out. the ceo spoke to us earlier to find out why he's not worried about european weakness. all stations come over to mission a for a final go. this is for real this time. step seven point two one two. verify and lock. command is locked. five seconds. three, two, one. standing by for capture. the most innovative software on the planet... dragon is captured. is connecting today's leading companies to places beyond it. siemens. answers. hey, buddy? oh, hey, flo. you want to see something cool? snapshot, from progressive.
5:19 am
my insurance company told me not to talk to people like you. you always do what they tell you? no... try it, and see what your good driving can save you. you don't even have to switch. unless you're scared. i'm not scared, it's... you know we can still see you. no, you can't. pretty sure we can... try snapshot today -- no pressure.
5:20 am
5:21 am
welcome back to the program. these are your headlines. spain's economy con tracts more than expected as the i go eyes new stimulus measures. boeing faces up to shareholders as the 787 nightmare look set to overshadow earnings today. and r.i.m. unveils its new blackberry. but will it be the comeback that investors are looking for? >> more to come on the 10 later. first, we'll dig into earnings here. swiss drugmaker roche announced a 11% rise in earnings, citing strong sales in cancer medicines and higher productivity. in a first on cnbc interviewer, the ceo said solid growth in emerging markets was helping to outweigh weakness in europe. the stock has done down. carolyn will tell us why i'm sure from zurich. hi, carolyn. absolutely. good morning to you, ross. yes, roche shares are down by around 1.3%.
5:22 am
they have been trading lower all morning. this is in large part because we're seeing profit-taking in roche shares. keep in mind, they have risen by some 20% since last november, up by roughly 10% since the beginning of the year. again, profit-taking is the name of the game. numbers were quite solid, more or less in line with expectations. sales rose 7% to 45.5 billion swiss francs. it wasn't just the emerging markets which helped sales but the u.s. markets. again, the strong sales in its ecology franchise. we're seeing a rebound in evastin and strong sales in herceptin. apart from that, the company did say that it expects sales growth at the levels it saw in the last year and also sees higher profits for 2013. >> all right. carolyn, thank you. straight ahead on the program, high demand for, yes, high yield. it's been a record january for corporate bond issuance. will the credit boom continue through the rest of the year?
5:23 am
>> we'll get that -- we love that. keep going.
5:24 am
[♪...] >> i've been training all year for the big race in chicago, but i can only afford one trip. and i just found out my best friend is getting married in l.a. there's no way i'm missing that. then i heard about hotwire and i realized i could actually afford both trips. see, when really nice hotels have unsold rooms, they use hotwire to fill them. so i got my four-star hotels for half-price! >> men: ♪ h-o-t-w-i-r-e ♪ >> announcer: save big on car rentals too, from $12.95 a day.
5:25 am
welcome back to the program. it's been a phenomenal start to the year for the corporate bond market.
5:26 am
more than 150 billion in issuance already which is a record amount for january. and the credit boom will intensify further, pulling stocks along with it or so says our next guest, brian reynolds, chief market strategist at rosenblatt securities. we've been following this theme with him. thanks for joining us again. let's talk a little about what you see happening here for 2013. a lot of people are out there saying whether you look at stocks or credit, there's no way we can sustain this strong a start to the year. what say you? >> it's actually going to intensify. this credit market has been driven by our nation's pensions and endowments and foundations. they're having more cash come into them because they've had to lower their investment assumptions, and that means they're making cash calls on the cities and towns that contribute to them. that means every tweerks every payroll, there's more money coming into the nation's pensions. that's only going to grow as the year progresses. while we're setting an issuance record for corporate bonds, we're also running into a problem as that demand is
5:27 am
outstripping supply. we're having a hard time finding companies that haven't already accessed the credit market. >> that's extraordinariment and brian, this is a great point because demand is coming from, you know, gram and gramps, basically. the extent to when the federal reserve plays a role in keeping rates, but people are looking at the 2% treasury yield and saying is this a sign of correction. can credit markets digest this upward move. in your view, what happens if we continue to go higher? >> well, actually, yields in the corporate bond market have been coming down. two days ago, junk bond yields hit the lowest level on record as treasury yields were rising. to me that's a sign of optimism. people have been selling their "safe treasuries" and going into riskier corporate bonds. and when that's happened in the past, in other credit booms, that's led to an intensification of that credit boom. and that pulled stock prices higher. traditionally, when the feds start raising rate and we're not even close to that yet, but when
5:28 am
the fed raises rates, credit booms become more intense. >> yes. so -- you're talking about demand now leading into structured finance, as well. what are the implications of that? and i wonder what the implications are of the sort of financial -- you know, how different is it this time as we get this move with the recent revision that's we've got to financial markets? in terms of the reforms. >> well, the big story this year hasn't been the record issuance. that's a big story in and of itself. but because demand for corporate bonds is outstripping supply, we've begin to shift to structured finance. when we reached the same point around 2004 in the last cycle, that's when we saw the credit boom become more intense. and we're going to start to see the same thing happen. at the end of last year, we started to see a surge in clo issuance, and now we're going to see a surge in cdo issuance. these are the same instruments that were used in the last credit boom that led to -- it
5:29 am
turned out to be one of the greatest credit booms in history the last time from 2003 to 2007. and now we're starting to use the same instruments for the same reasons all over again. >> and brian -- >> as to your second question, so how it different this time, this is going to be more intense, and it's going to be an even longer credit boom because the needs of our nation's pension funds relative to the yields they can get, that gap is even bigger now than it was in the last credit boom. >> extraordinary. it just gives you a sense that we may, as brian said before, be nowhere near the ninth inning of this move. it could be bigger and better. thank you very much for getting up early. person story. we appreciate it -- important story. we appreciate it. still to come, serving more than a billion people. no, not mcdonald's. it's facebook. the social media giant has grown by leaps and bounds since mark zuckerberg came up with the idea in his harvard dorm room. despite blips last year -- >> how has facebook succeeded where others have failed? we'll learn to think like zuck when we come back.
5:30 am
5:31 am
5:32 am
welcome back to "worldwide exchange." i'm kelly evans. >> i'm ross westgate. headlines from around the world -- >> spain sees a better than expected drop in fourth quarter gdp as one of its most indebted regions asks madrid for more than nine billion euros in aid. trouble for boeing. records on batteries used in its dreamliner jets after ana
5:33 am
announced it had to replace faulty devices on its jets several times. betting on blackberry. research in motion takes the wraps off its long-delayed new operating software. analysts say it's crucial to the company's survival. roche trades lower after posting solid earnings because of its cancer medicines. some analysts warning about the loss of exclusive rights to a key chemotherapy drug. we're actually looking for a positive open on the dow. if you take fair value into account, adding about 16, 17 points here, 13,908. inching closer to the 14,000 level, 14,107 the nominal high. the nasdaq 40% below its nominal high. that was the dot-com bubble. a very different time. this index has been one of the best performers since the market
5:34 am
bottomed in march, 2009. looking to add eight points at the open. we have earnings coming up after the closing bell from facebook and the likes. s&p 500 looking to add a couple of points, too, 1,505. trying to hold steadily above the 1,500 level. the flip side, an increase in oil prices, in -- increase in treasury yields. we'll give a sense of what's happening during the trading session. the ftse 100, barely. a shift down since the last time we checked. most indices in red, including xetera dax. cac and ibex shedding .1%. and italy weighed down by a 3 % drop in shares of oil producer saipem. how do you make money in these markets? here's what our guests have been telling us all morning. >> the dollar/yen, it's going to be hard to reverse actually. why would you short it when you have a central bank on the other side hinting that they're going to push it up to 1995 or 100 where they think -- 95 or 100 where they think is a better
5:35 am
level. so far the germans, there's perhaps not too much international pressure. that's going to drag currencies higher across the board. >> when you can invest in the u.k. is next which obviously has a well-established catalog business. they're fortunate that that's something they took from history. of course it's migrated well to an online proposition. the stores are doing okay, as well. >> certainly bolster expectations from the market. but q.e. 3 will be a short-lived affair in which case that will be negative for u.s. treasuries and core bond markets and perhaps take some of the steam out of the equity rally. >> some thoughts on the trades of the day. >> less of a macro, more of a micro. a lot happening in the u.s. in the meantime -- by the way,
5:36 am
this is not new. u.p.s. dropped its takeover bid for tnt. this is confirming it. in another corporate story, shares of saipem down in the range of 35% today. one of europe's biggest oil services companies. came out -- >> with a big profit warning after the market close yesterday. talking about, you know, some of their metrics, on shore revenues down 70% or so. an enormous profit warning. >> barclays cut its price target 45% to 22. you see csaipem dragging down, too. the oil giant has a sizable -- quite sizable exposure to saipem. it's a vicious circle for these companies. interesting story. hopes were high for facebook which results fourth quarter results after the closing bell. investors watching for strong revenue growth especially for from mobile ads. more than half of the 1
5:37 am
billion-plus users access the social network through their mobile device. after a challenging 2012, the company's disappointing ipo, shares are up more than 17% so far this year. joining us with more on the company's keys to success is author of the new best-selling book "think like zuck." kateri katerina, what's that mean? welcome. >> hi. good morning. "think like zuck" to me is a mentality. the mentality of a leader who has passion, who leads with purpose, who builds strong teams and creates excellent product. and also partners smartly, right. i think there's this new generation of young innovators who don't have any business experiences who create this amazing companies. i wanted to explore facebook, threadless, companies like such. >> i wonder if it's not as simple as user engagement. the amount of time people spend
5:38 am
on facebook on, a mobile device on, their desktop, hours and hours. there are very few companies that can claim that find of mine share. >> absolutely. one billion users like you mentioned. an interesting thing is they just lost their mobile ad products and already out of $1 billion in revenue, 14% comes from the mobile products. it's expected to grow. if you just look at u.s. only, facebook garnered 18% of market share compared to google, 17%. that tells but the strength, the dedication and amount of time people spend on the network. >> what's the key -- if you say, look, facebook is a success, zuckerberg is a sucks, wh -- is success, what can you apply to your own business? >> i believe two thing.
5:39 am
leading with purpose. he is very, very focused on his purpose. and what he wants to do is connect people around the world and create more transparent world. even if he's a little bit radical sometimes about it. and i think the second one is this mindset of staying in permanent beta. the sort of creating a culture of urgency which he's very known for, hacker culture. and making sure that his leadership and employees know that the journey is only 1% finished. they're not down. they're never done. >> that's a great point. what in your view having looked at other companies is the biggest risk in terms of execution, in terms of strategy for facebook or mark zuckerberg? >> i believe two things. one is making sure when he grows mobile he also considers feature phones. not just smartphones of countries like africa, south america, and other countries, you know, you look at the u.s. and canada, and he's getting over $3 peruser revenue coming
5:40 am
in and the rest of the world is about 50 cents. especially countries that have feature phones and don't have access to smartphones i think is going to be an important thing. and also search. he himself said that mobile version of search isn't going to be coming for years. there's going to be no integration in the foreseeable future with instagram. what does that mean for him? i think looking at the fact that he's probably not getting into china any time soon, that is sort of mobile in growth, integration into the current web as a platform i think are two biggest bet for him. >> thank you, author of "think like zuck." we'll see if market are like zuck later today. amazon's fourth quarter profits down 45% as higher revenues failed to keep up with rising spending on digital content and new distribution
5:41 am
centers. results missed forecasts. amazon's first quarter outlook is also shy of analysts' estimates. there's a big but here. but, but, but -- >> gross margins. >> as you rightly say, were better tranexpected. 24% -- better than expected. 24%. the ceo also highlighting the strength of the kindle business which grew around 70% last year. it was those margins that investors focused in. it was up after hours around 9% in new york, currently up 4.5% at the moment in frankfurt trade, as well. >> exactly. if you look at the 2.08 price and you see a janney raising prices from 310 to 300 suggests people think the stock has further runs. who needs to make money? >> yeah. can they get margin expansions. now they're saying we're going to focus on costs. margin expansion and market share. >> right. right. still a fascinating case going
5:42 am
up against the other big names that we've been discussing. plenty more to come after the break. we'll head to new york to preview the launch, yes, of the blackberry 10. will it be enough to turn around r.i.m.'s fortune? ♪ (train horn) vo: wherever our trains go, the economy comes to life.
5:43 am
norfolk southern. one line, infinite possibilities.
5:44 am
5:45 am
welcome back to "worldwide exchange." it is the launch date for the blackberry 10. we'll give you a sense of what blackberry's main competvors seen for the latest launches of their devices. a tough task to try and top these figures. apple's iphone 5 has sold 35 million units around the world. over here, samsung's galaxy s3 has sold 40 million. extraordinarily successful launches for these two products. now when it comes to the blackberry 10, there's a general sense that blackberry, maybe r.i.m. can sell 13, 15 million for the year. for the quarter, february could be more in the range of half a million, not even one million. we'll see. that's why yesterday yesterday investors expressing caution, sending r.i.m. shares down 3%. they've doubled over the last three months. there's been a revival in hopes as to what the company can achieve with the relaunch. ross, you've seen the device. there's optimism, but is it enough to really turn around this company's fortunes? >> you know, a good point. i think the thing is, if it's --
5:46 am
a brand new operating system. the handsets that i played with and everybody else played with and davos liked it, it was intuitive -- it will take a while to learn. learn what you texts. learns the words that you use. it can comes quickly. you can do it on one hand. >> i want the keyboard. i'm a diehard fan. >> it will be in two stages. you'll have the first one is without the keyboard. the second, a month's time. i don't think you call it blackberry 11. i think you call it 10.2.0, wherever it is. that comes with the keyboard. everybody looked at it in davos, thought it was cool. you got to start with a cool product, right? >> yes. this is the question around apple for sure. they're confident. you want the ceo to be confident. >> you hope. >> you understand there will be more announcements over the course of the month in other aspects of things, as well.
5:47 am
around the money -- >> for investors. >> earlier we asked -- if you're planning to get a blackberry 10. thomas wrote in to say he's looking forward to buying one although the real winners win at&t and verizon. john tweeted he'll buy one as long as it's affordable. and jash says he's team b.b. all the way. there you go. everybody -- those people tweeting say -- have we got anybody who says they're not going to buy one? there you go. it's waiting for 10, coming outer later. >> that's for sure. if you're just joining us, these are your headlines -- spain's economy con tracts more than expected as the government eyes targeted new stimulus measures. boeing faces up to shareholders as the 787 nightmare looks to overshadow earnings later today. and r.i.m. unveils its new blackberry. will it be the comeback kid investors are looking for?
5:48 am
5:49 am
[ technical difficulties ] phil lebow, our man to the skies, will join us from chicago when we come back.
5:50 am
5:51 am
spain's economy contracted more than forecast in the fourth quarter. gdp down 1.8% annually. north .7% from the previous quarter. analysts polled by reuters were
5:52 am
looking for a smaller 1.7% drop over last year. speaking of parliament, shortly after the release, the spanish prime minister, mariano rajo, planned to announce new stimulus measures. hasn't done much in terms of equity price performance. down satellite small members, the xetera dax, cac, and ibex. >> the s&p 500 pointed to add two or three points to 1,504. sitting at multi-year highs. we've hit several benchmarks for thing like the russell 2000 and transports. these being eyed for potential signs of a breakdown. now the national transportation safety board is asking boeing for a full history of the lithium uon batteries used in its dreamliner jets. the ntsb made requests after learning of incidents that occurred before the battery fire
5:53 am
at an al nippon airways jet at boston's logan airport on january 7. phil lebeau joins us now on the phone from chicago with the latest on this story. and phil, what is -- first of all, what's boeing saying about this? secondly, are they going to be able to address it? will they have to address it on the earnings call later? >> good morning, kelly, ross. they will have to address this. but i think this might be a bit of a disappointment for investors who are looking for a clarion call in terms of, hey, here is what is going on so that we have a better sense of let's say the next three months. i think we're in a period here with the dreamliner investigation where when you look at the reports coming from investigators, when you look at what we're hearing back from al nippon airways from japan airlines, it's clear that there is no send that they know exactly what happened with these batteries.
5:54 am
as a result, boeing on the conference call yesterday posted fourth quarter and full-year earnings. the ceo will get a lot of questions about what happened with the dreamliner. and unless he says we're going to have to change production, i'm not sure we're going to see much reaction from the investment community because i have a sense what we're probably going to hear from jim mcnerney and the other executives at boeing are a lot of answers such as we're looking into it, the ntsb is looking into it. and until we have a definitive answer in terms of what went wrong with these batteries or what may potentially be wrong with the power systems in the dreamliners, i think there's going to be a different of a disappointment for investors. >> all right. thanks for that, phil. good to see you. more to come during the course of the day, as well. joining us in the studio, aircraft analyst. do you agree with phil that there's unlikely to be a huge reactioned to to see boeing unless they say -- reaction to boeing unless they say we're going to change? >> very much so. the boeing management are not in a position to give anything
5:55 am
definitive at this stage. so they will not be able to give us very much. that's the big question actually for the forecast going forward, 2013 earning. this creates major uncertainty. how many -- how many aircraft are they going to deliver, what kind of provisions will they need to take. >> that's what i was going ask. that seems to be one area of 401( focus for investors. any idea of expectations there? >> you have two lots of potential provisions. one is the delay and the disruption that causes the company. so the costs incurred by the company. in addition to that you have potentially consequential damages. 50 aircraft are grounded. so the airlines will want compensation. there are going to be further delays of deliveries now, 50 aircraft. if you put one million per aircraft per month, it soon adds up. >> absolutely. and i wonder to what extent this changes the investment thesis
5:56 am
forgoing. >> at this stage, it's too early to say what the long-term damage is. as boeing have been saying, there are glitches. airbus had their problems with the a380. so in the short term, it's unclear. longer term, what is the reputational damage. will they lose orders on the 787, will the a350 win on the back of this? these are the issues which we still need to think about longer term. >> it comes as boeing last year surpassed airbus to become the world's biggest seller of aircraft. and now clearly overshadowed by these issues, as you mentioned. it's not as if airbus is looking at this as a competitive advantage. they are trying to do the same things with the next generation of airplane. so this serial an industry for the future on aviation. >> indeed. and last time i was here, you showed a clip from john lehey who was saying they don't wish any kind of fill on boeing. it is an issue that the industry
5:57 am
faces. i very much it doesn't damage the public confidence in flight. >> exactly. >> interesting to look at the faa that did battery tests on the lithium bratteries and said there's a problem with them overheating. wonder why they used them. did they have a choice? >> the lithium line is a lighter battery, charges quicker, packs more power. i saw a presentation from airbus on their web site this morning. they brent e-- prevented that a year ago saying you need to take safeguards. if the safeguards are taken, you derisk it substantially. >> good to see you. thank you very much for joining us. analyst at societe generale. >> lots of ground to cover. we'll keep an eye. not helping the italian index, already suffering from the story we were talking about earlier. and an auction out of italy. they raised money.
5:58 am
suggest bond markets aren't nervous three weeks ahead of the italian parliamentary election. we continue the countdown with more upnext.
5:59 am


disc Borrow a DVD of this show
info Stream Only

Uploaded by TV Archive on